HelloFresh, a Meal Delivery Start-Up, Raises $50 Million
June 18th, 2014 by admin

The race for dominance in the dinner-kit delivery business — where companies ship out packages of fresh ingredients for specific recipes, ready for customers to turn into home-cooked meals — is intensifying.

One of the earliest entrants in the industry, HelloFresh, said on Wednesday that it had raised $50 million in a new round of financing led by Insight Venture Partners and an existing investor, the Russian firm Phenomen VC.

The round comes less than two months after another big player, Blue Apron, raised $50 million at a reported $500 million valuation.

While the HelloFresh co-founder Hamish Shephard declined to disclose the company’s valuation, he boasted that the start-up is now profitable in its European markets. The company now ships more than one million meals per month.

Competition is arising in an unlikely business, one that seizes upon both the popularity of home cooking and the continued explosion of e-commerce. Unlike traditional meal-delivery services, these companies deliver nearly everything needed for a meal — except for the actual kitchen preparation. Subscribers generally pay $60 to $70 per week for the ingredients to make three meals for two people.

The fund-raising is part of HelloFresh’s efforts to become better known in the United States, after having flourished in its home market of Germany. Its initial backer is Rocket Internet, a German e-commerce start-up factory.

With the rivalries rising between HelloFresh, Blue Apron and other competitors like Plated, the battle is on to expand delivery to more of the country. With its new fund-raising round, HelloFresh plans to expand to 37 states from 30, covering an estimated 75 percent of the United States’ population. It will also expand its marketing campaigns.

“We’ve had better-than-expected success” in the United States, Mr. Shephard said in a telephone interview.

He contended that his company is focused on providing exceptionally high quality: It sources its cheeses from Murray’s Cheese in downtown Manhattan, and the chefs who prepare its recipes have spent time in popular restaurants like Momofuku and ABC Kitchen. Freshness is a priority: Ingredients arrive around 9 a.m. at the company’s New Jersey delivery center and ship out by 4 p.m. that same day.

He also argued that his start-up has an advantage in having started a few months earlier than competitors and in learning lessons abroad. (That said, he believes the industry can support a number of different players.)

“Our experience is a fantastic advantage for us,” he said.